More Rupees on the way

One of the key stories of this year in shale has to be the emergence of India out of nowhere on shale.  Not only are the Indian and US governments way ahead on setting up exploration in India,  but Reliance Industries has already invested over $3billion just this year in three separate US deals.  A few weeks back, it looked as if Reliance was going to take a breather as a rumoured  October Chesapeake Eagle Ford shale deal ended up being snookered by CNOOC.  Is Reliance relaxing?  No.

   
RIL to invest $15 bn in US shale assets in next 5 years
BS Reporter / Mumbai November 01, 2010, 23:37 IST
Reliance Industries Ltd (RIL), the energy to retail conglomerate, today said it would invest around $15 billion (Rs 66,800 crore) in the next five years in its petrochemical business and to develop shale gas assets in the US.

RIL’s chief financial officer, Alok Agarwal, in an address to the media, said the company had already paid $943 million to buy three shale gas assets in the US and would spend around $2.5 billion towards drilling of wells at these assets.

Shale Gas fracturing healed by outbreak of sanity?

It's certainly coincidental with the John Stewart Rally for Sanity,  but could the same thing be happening between drillers and greens over fracking?

The story here from  the Houston Post is counter narrative on much of the media reporting.  Especially in Europe, where what little reporting there is on shale invariably accentuates the negative. But we can turn fracking into a win-win for greens, the gas industry and the planet too.

 Energy companies and environmental groups have more often been adversaries than allies when it comes to hydraulic fracturing, the drilling technique used to unlock natural gas from shale rock nationwide.

But a handful of gas producers and environmental advocates are striving to change that dynamic by collaborating on a plan to step up the safety and regulation of hydraulic fracturing.

Both sides hope to gain by working together.

For environmentalists, it's an opportunity to stiffen standards for a technique that is increasingly used nationwide and could help boost domestic supplies of a cleaner burning power source.

For the industry, it's a chance to counter a major PR problem that threatens to undermine support for domestic natural gas production through this method and could drive bans on its use.

 What's happening is that Southwestern Energy and the Environmental Defence Fund are hashing out an agreement on shale.

Mark Boling, executive vice president of Southwestern Energy, said he hatched the idea for the collaboration because the current debate is becoming more polarized, with a fearful public not soothed by industry assurances that hydraulic fracturing has been safely used for decades.

"It's not going to help to keep saying we've done it for 60 years and no one's ever proved" there's a problem, Boling said. "The fact is, the public is concerned. They are fearful of what they don't know."

"It is our obligation as an industry to let them know what the issues and obstacles are and show them we are willing to work with environmental groups and state regulators to come up with solutions," Boling added.

The new project is still in the very beginning stages, with the Environmental Defense Fund and Houston-based Southwestern Energy at the core.

But the progress seems to coming along so well that other companies and groups are joining the discsussion.

The broader discussions build on months of negotiations between Boling and Scott Anderson, a senior policy adviser for EDF, over what is now a 40-page draft of possible regulations they hope can be a model for state officials.

The pair expects that a final proposal – which could be ready next year – will deal with a raft of subsurface issues, from the composition of fracking fluids to the integrity of underground wells.

For instance, the plan could propose that companies disclose more information about the chemical cocktails used in fracturing, force regulators to evaluate the geological formations at proposed wells and mandate better pressure monitoring.

In particular, the companies and environmental groups want to develop new standards to ensure the integrity of wells, given explosions and groundwater contamination linked by some to natural gas wells.

Anderson stressed that better well construction would prevent problems.

"As far as the underground aspect goes, hydraulic fracturing should be perfectly safe, if people get all the other stuff right," Anderson said. That means the casing program for the well, the cementing and pressure management all need to be done properly, he added.

 Everyones a winner? Just about.  Except for those companies who have built a business model on energy shortage, gas shortage, peak oil, CCS, off-shore wind, gas storage etc.

But the big losers won't be just companies, it will be governments who insist on sticking their heads in the sand and promote shortage fears and the price rises that come along as part of the package.

I guess another loser would be Josh Fox of Gasland.  But he obviously has never needed the money, so he can safely go and bore audiences, with the occasional flash of brilliance I concede,  with avant-garde theatre.  Perhaps he'll be a winner after all.

US EIA to raise gas reserve estimates

I was thinking the other day that in about six months we should see one of the once every two year's reports from the US Potential Gas Committee.  Last time they increased US gas reserve estimates by over 40% from the 2007 report.

Until then, the US Energy Information Administration will issue a forecast in December.  No surprise as to which direction it will be going:

 The U.S. energy forecasting agency plans to boost its natural gas reserve estimates in its upcoming long-term outlook as shale gas potential continues to rise, the head of the agency said on Thursday.

As technology allows developers to tap gas trapped in shale formations around the country, natural gas prices will remain under pressure, said Richard Newell, head of the Energy Information Administration.

"I'm anticipating it will be an increase in the natural gas resource base…this can have an impact on prices in the downward direction and on production in the upward direction," Newell said at American Gas Association event.

The EIA is everything Ofgem isn't:  Transparent and it never forgets that it's there to help consumers, not provide a constant excuse for suppliers.   


UK retail gas prices to rise!

Amazing but true.  Why is SSE energy raising prices?  Simply because they can.  Ofgem will not say boo to them or the others.

Customers of Scottish and Southern Energy will see their gas prices increase by 9.4% from December.

The energy provider's decision is expected to affect around 3.6 million people in the UK.
The company blamed rising wholesale gas prices, saying gas supply has been a loss-making activity which can no longer be absorbed.

Ofgem will back them every inch of the way.  But meanwhile

Bloomberg today

The oversupply in Europe’s power market will “worsen” until at least 2013 as utilities and producers add capacity based on investment decisions taken at the top of the energy price rally two and three years ago, UBS AG said on Oct. 14.

German 2011 power has lost 8.9 percent since the start of the year and 5 percent this month.

The contract tracked natural-gas costs, a fuel used for about 15 percent of power generation in Germany. U.K. gas for delivery from April through September next year slid 14 percent since July 5 to trade at 46.57 pence a therm today. The U.K. is Europe’s biggest market for the fuel, and gas prices there affect those on the continent.

Bloomberg on Wednesday:

 U.K. natural gas is trading in the narrowest range in 11 years as increased imports and storage capacity counters concern that North Sea production is waning.

“There isn’t the risk” of large price swings at the moment, John Fahy, managing director of Eras Ltd., an energy- research firm, said yesterday in an interview from London. “The market’s a lot more flexible than it was before.”

And Bloomberg last week:

Barclays Plc said it recommends selling U.K. natural gas for delivery in the six months through September as prices are too high.

“Our only new position this month is a short in the U.K. natural gas summer strip for 2011,” Barclays Capital analysts including Suki Cooper said in a research note dated today.

Forward prices look “substantially overvalued,” according to the bank, which pointed to the potential growth in liquefied natural gas supplies to Europe.

Need any more proof that Ofgem is deliberately sabotaging the UK economy?

Bloomberg again, just over an hour  ago:

– U.K. natural gas fell as a liquefied natural gas terminal’s new jetty received its first cargo and temperatures next week may exceed the seasonal norm.



FT on shale.

I've accused the FT of missing the boat on shale for a couple of years, but Sheila McNulty from the Houston bureau has always been very good on first US, and now international shale

In the past few years, US small gas producers have invited foreigners to join their drilling programmes on shale fields across the country.

These partnerships have led to billions of dollars in investments, from companies ranging from Statoil of Norway to CNOOC of China, that have enabled the small producers to keep drilling. In exchange, the foreigners get to learn first-hand how to extract gas from the hard rock.

And they have set the stage for a repeat of the US’s shale boom elsewhere in the world, as the foreign investors hope eventually to export the expertise they are gaining.

“The longer-term prize is China, South Africa, India and Europe,’’ says Jeremy Michael, a managing director at Barclays Capital. “They do want it to spread, but there are challenges to overcome.”

One big challenge to overcome is back on Southwark Bridge Road, where the FT completely ignores any lessons for the UK from shale's success. They print all kinds of stories on UK energy policy without ever mentioning shale at all, or if they do only to repeat Ofgem's view that it has no relevance whatsoever to UK energy policy. Here is an excellent story, but left to die on Friday afternoon, the same day the FT pushes a big hurrah for UK offshore wind policy piece by Fiona Harvey.  (Update and correction:  This now appears to be in the Monday November 1 print edition Energy Report).

Yet, even if the US uses more gas, Deloitte’s Mr Prakash says it is hard to see why the country would not seek to export some, given the plentiful supply: “It’s not as if it is going to run out in the next six years.”

But analysts say there are concerns that environmentalists might slow the development of the resource or even block it in some places. Congress has asked the US Environmental Protection Agency to study the safety of the hydraulic fracturing technology used to get the gas out of the rock.

Which analysts are those?  Ofgem, Gazprom, Josh Fox and who else?  Certainly not No Hot Air, who in my report being published on Monday explain the reality as oppossed to the myth of shale uses too much water, fracking has lots of nasty chemicals, water catches fire and many another myth besides.

 

More on China Shale

The possibilities of shale internationally are relatively murky:  Much of the figures derive from Rogen's analysis of 1997.  Advanced Resources International think them understated and they are surely right:  Everything else in shale this century has been the story of what yesterday's hype becoming today's outdated estimates. The Marcellus is only example. 2004 estimates 4TCF, today 500+.

At the bottom of this Bloomberg piece on China and Shell and shale are some current numbers

China’s unconventional gas output, including shale gas and coal bed methane, will rise to 15 billion cubic meters by 2015 and 50 billion cubic meters by 2030, based on the government’s estimates, Tony Regan, principal consultant with Tri-Zen International Ltd., said in Shanghai yesterday.

“The targets are conservative and we can easily see 100 billion cubic meters a year by 2030,” Regan said. “We see a really strong commitment from China in shale gas in the coming years.”

How big a number is that?  For starters 100 BCM is more than the entire UK consumption of 87BCM or that of Canada at 95BCM.  But could we also see China as virtual LNG exporter in the way that the US has become?  China imported 7.63 BCM in 2009, and we hear all kinds of stories about it needing ten times more by 2020.  But it's hard to see China importing 76BCM while producing 100 BCM of shale.  We won't even mention Turkmenistan and Myanmar imports, domestic CBM  and possible Siberian and or Sakhalin pipelines.


Global Shale Gas: What Now? What Next?

Global Shale Gas:  What Now?  What Next?  is published on November 1

Shale Gas has come out of nowhere to be THE energy story of the 21st Century.

But the narrative has changed so fast from scarcity to plenty that most people have missed it. Many people made investments that depend on high energy prices. What happens now?

Need reliable, up-to-date and unbiased information, analysis and opinion on shale?  Look here.

GSGWNWN provides  information, insight  and opinion from No Hot Air’s two year experience in shale gas,  far ahead of mainstream media and the conventional wisdom of insecure energy supply.

The report provides an up to date view of shale gas grounded in and suitable for many perspectives:  geology, industry, alternate energy, regulation, trading and the environment are only some of the markets sector who will find this attractive.

Some parts of the takeaway menu:

  • The key issue going forward for natural gas is not managing supply, but creating demand.
  • The US success in shale gas technology can be replicated in multiple locations world-wide
  • Environmental issues surrounding water use, hydro-fracturing, well spacing and disruption to communities are more often the product of fear and myth, not present and future reality.
  • Natural gas can provide currently viable, scalable, affordable and significant but partial decarbonization of the electric generation sector. 
  • We must be realistic: Other technologies aim for a full decarbonization at some point several decades away.  Is it wise to bet on technology today for 2050?
  • The greater environmental risks are likely to be those associated with not developing shale resources.
  • Similarly, the greater economic risks of shale increasingly appear those associated with NOT developing shale resources.  
  • Shale gas has the potential to reduce energy costs during a time when global stimulus is again becoming necessary.
  • Lower energy costs reach consumers and industry far quicker than tax or regulatory changes can.
  • Europe in general and the UK in particular risk being marginalized as China and India embrace shale gas potential as other nations deny it.
  • Green issues are more likely to be raised in Europe not by environmentalists, but by those funded by the nuclear, Coal Carbon Capture and Storage, gas storage and large scale pipeline project industries.

The report costs £2,000, €2400 or US$3100 plus VAT where applicable.

119 pages and includes 52 maps, tables, charts and diagrams

Topic’s covered include:

The birth of Modern Shale: The sudden emergence and future abundance of global natural gas

Geology for non-geologists

Fracking:  What’s in the Secret Sauce

Water on the brain:   Good news reality, not fearful myth on the environmental impact of shale

Shale Gas in Canada:  As soon as 2014, European consumers will be getting much of their gas from a big, cold, empty country full of bears.  But it won’t be just Russia anymore

US Natural Gas Exports:  The USA as energy exporter?  Unbelievable two years ago.  The virtual reality today, the physical reality as little as four years from now.

Shale Gas in Europe:  Problems and Solutions.  The impact of shale gas in Europe is closer, and will be greater than most of the “conventional wisdom” fears.

Shale’s impact on LNG markets: The reality behind world LNG markets. The virtual exporter role of the US in the short term will be replaced by North American LNG exports in the medium term. By 2020 and beyond, the virtual exporter role could be provided by Chinese and Indian import displacement via domestic shale gas.

The oil-gas link: Dormant or Dead?  Shale Gas changes everything. Again.

The Gas Exporting Countries Forum: Can they have an impact on gas prices going forward?  Probably not.

Download SampleNov3

Sample pages above

list of contents here

Download Global Shale Index

e-mail NHO @  guru@nohotair.co.uk   for details on how to purchase

Ofgem battles reality in the Ukraine

What is more surprising?  That Ofgem continue to push the energy insecurity due to Ukraine/Russia ructions or that people still believe it?  This presentation is only 10 days old but as far as Ofgem are concerned, they are still concerned about a re-direction of LNG supplies (where on earth to?) and

Ofgemoctober2010
even more disconnected from reality, are still concerned, or is that obsessed, with the problems of a Russia/Ukraine dispute interfering with UK security of supply.

Reality intrudes:

KIEV — Russia and Ukraine on Wednesday signed a raft of agreements including in shale gas exploration and nuclear cooperation amid concerns by Ukrainian opposition over increasingly closer ties with Moscow.
The accords signed by visiting Russian Prime Minister Vladimir Putin included a deal by Tvel, Russia's nuclear-fuel state producer, to set up a joint venture to build a uranium processing plant in Ukraine.

BP's Russian joint venture TNK-BP signed a preliminary agreement with the Ukrainian government to explore for shale gas in Ukraine.
TNK-BP executive director German Khan told reporters ahead of the signing that his company hoped to begin exploring for gas in eastern Ukraine and the company could invest up to two billion dollars in the project over the next 25 years.

Sounds a real dangerous situation in Ukraine, especially the part about a BP joint venture investigating shale gas. Definitely not in the UK's national interest? Or to be more exact, not in the interest of Ofgem, in their continual battle to rationalise higher gas and power prices?

 

China gets shale. And now China does shale.

Big news from China today on shale gas.

China will offer shale-gas blocks to the nation’s biggest energy companies as the world’s largest polluter aims to increase the use of cleaner-burning fuels to help reduce carbon dioxide emissions.

The government will offer six shale-gas exploration blocks to PetroChina Co., China Petroleum & Chemical Corp., Cnooc Ltd. and Shaanxi Yanchang Petroleum Group Co. in an auction to take place within a month, Zhang Dawei, deputy director of oil and gas strategy research at the Ministry of Land and Resources, said at a conference in Shanghai today.

A part you've got to love about this story is how, once they decide to do the policy, then the auctions take place.   Within a month!  And there was I impressed at the speed of which India is pushing forward with shale with their plans for shale auctions next year sometime.  Compare and contrast this with UK Ofgem's official view point that there will be no European Shale until 2025!

So now China is doing shale, while the UK hasn't even heard of shale.  Commenter Alex pointed out earlier how shale is barely mentioned by the 600+ MP's and innumerable members of the great, good and clueless in the House of Lords through his search of the public record.  So China is getting ever further forward than the UK (and much of the rest of Europe).  How can we be so unaware of shale!

We were told lately how the number two man at a  (White)household name US oil field services company is putting their shale resources in China ahead of even the great opportunities in Poland,  one of the most shale friendly countries going.  Why:  that's where the money is obviously a very fine reason.  But the overall reason is that Europe doesn't even want to know about shale.  It shouldn't be their job to convince Europeans to act in their own best interests.  And how can they make money if Europeans constantly think up excuse after excuse to rationalise far more expensive energy boondoggles?

Back to China:

The shale-gas blocks up for auction, each as large as 7,000 square kilometers (2,700 square miles), are in the provinces of Guizhou, Shanxi, Anhui and Zhejiang, and the municipality of Chongqing, Zhang said. The government considers offering an exploration subsidy of between 0.23 yuan (3 cents) and 0.30 yuan per cubic meter, according to Zhang.

Interesting how the conventional wisdom here in Europe is that Europe is too crowded and too environmentally aware to allow shale, yet in China they plan to allow it in Chongqing a municipality of over 31 million. 

Things are tough enough with EU competition from China.  For the UK government to insist on a gas blind energy policy that builds in 40 years of subsidy for CCS, nuclear,  and storage while China powers ahead with low carbon, low cost natural gas is a slow moving train wreck of an energy policy. 

I guess I'll have to put myself on the tracks, but where is the media who should help me?  Writing blackout Britain without nukes,  fix your energy price via our web site and CCS Britain's export powerhouse stories.

China gets shale.  And now China does shale.  While the UK says: What is shale?

 

Norwegian LNG

Norway,  which already exports almost 100 BCM to the rest of Europe by pipeline, was seduced by the sirens of the LNG trade early enough that they actually built an export facility at Snohvit (Snow White) in Northern Norway accessing gas produced from the Barents Sea.  Thats conventional gas by the way.  Sourced from hundred of meters under the sea above the Arctic Circle, then shipped 87 miles to shore after which the journey has just begun.  Meanwhile  shale gas produced in Fort Worth finds end users in Fort Worth, yet is called unconventional. Go figure.

The markets of Snohvit, judging by the initial investors were originally the US and Spain.  We all know that the US market is shut down for imports.  Spain doesn't need as much as due to a spectacular drop in demand from recession and the rain in Spain falling mainly in the mountains this year, providing hydro for generation. So where does gas go when the fixed contract customers go?  Anywhere.  Does this sound desperate or what?

Norway's latest LNG shipment was dispatched to South Korea over the weekend of 23-24 October.

The 162,400m³ BW GdF Suez Paris departed the Snohvit liquefaction train yesterday, without a firm date of arrival at its expected destination of Inchon.

The cargo will be South Korea's first from Norway, and marks a further diversification in the destination of Snohvit output.

They say diverse, I still say this is a sign of desperate sellers.  There has to be a cargo closer to South Korea  than Norway.  Sakhalin must be two days away, while this cargo will be lighting up Korean Christmas trees. With a fair wind.

The fixed term customers surprisingly enough are still taking some gas. But for how long?  This doesn't sound like long term security of demand for Norway.

So far this year, Canada, Italy, Taiwan and Turkey have each taken cargoes, accounting for 11pc of the shipments dispatched from Snohvit between them. The UK — which only began to receive Norwegian LNG last year, when it took 2.5 cargoes — has taken 8, or 18pc, of Norway's shipments. Spain's share has fallen to 38pc, while the US share has dwindled to 18pc, level with the UK.

The winner seems to be European customers who can get Norwegian LNG as well as pipe gas.  And  the LNG is probably cheaper.